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Seven Questions about Clinically Integrated Networks

Today’s clinically integrated networks vary greatly. Managing these networks may be more art than science at this stage. Many may find it a steep learning curve.

Many health care organizations are early in their journey to form and use a clinically integrated network (CIN). For others, it is a “useful and flexible tool”. For still others, “it is our future”. Below, we “check in” on the progress of seven aspects of a CIN:
• Goals and priorities
• Shaping the right network
• Culture, incentives and communications
• Differences in health system, physician and payor perspectives
• Cost reduction
• Incentives alignment
• Change management

Goals and priorities. Much of the variation in today’s CINs tie to differences in the overall strategies of health systems that formed them. For example, some health system leaders describe their markets as in the “land grab” stage. “We are developing the tools for population health management, but Goal One is getting our group of hospitals, physicians and other players to be more attractive to the marketplace than our competitors”. For these organizations, the CIN is a flexible tool for developing a broader range of close relationships– less than a merger but far more than a loose alliance.
Many CINs are in the phase of developing tools. “Which tools are best for us? Which vendors should we work with? What do we achieve with a partner, vs. a vendor? What elements of infrastructure should be the same across the network, and what elements will not?”

A few CINs are “going deep”. For example, these CINs are asking, “How do we lower our per member per month (PMPM) costs, and how do we keep and distribute a significant share of the cost difference?”

Shaping the right network. CIN leaders are beginning to recognize that the network requires “fine tuning” on an ongoing basis. Large scale thinking – such as the “land grab” – begins to evolve into new questions. More mature CINs are asking, “How attractive and how effective will we be in meeting the needs of key population segments?” For example,

• Do we have the right partners to meet the needs of children across our service area?
• Do we have the right partners and relationships for meeting the needs of chronically ill patients?
Of patients with multiple diagnoses, for the complex patient?
• What arrangements have we made for quaternary care?
• Is our primary care network right sized for our specialty care?
• Do we have the full complement of services (for example, rehab, home health, and behavioral
health) for our populations?
• Are we attractive to the demographic groups we want to attract?
• Are we attractive to leading employers and employer groups?

Over time, CINs may form mini-strategies and action plans around patient segments.

Culture, leadership and communication. There is another area of questioning that shapes networks. Are we sufficiently similar in our overall goals and cultures? Can we work together effectively? The leadership and culture of CINs usually evolve over time.

Many of the questions CIN leaders are asking today are strikingly similar to the questions that aligned integrated systems (e.g., Geisinger, Kaiser, Marshfield) asked 25 years ago. These familiar leadership issues include:

• How do we communicate effectively across the different elements of the system?
• What roles do physician leaders play? Do we try a dyad approach to leadership?
• How do we develop the next generation of leaders?
• Is our leadership approach helped by bringing in leaders from other systems, or does this slow
us down?
• How do we link our goals, culture and incentives structures?

CINs also have leadership issues that are unique, and that can prove to be very challenging. What do we do if leadership styles and personalities clash within the CIN? This is relatively easy if most or all of the CIN is within the same health system. (In this case, health system leadership can help lead, shape and/or referee the development of the CIN.) However, many CINs are crossing health system boundaries, and several strong leaders may be involved. In these cases, the CIN culture and leadership have to evolve. This leadership setting process is similar to what takes place in a merger. The resulting leadership style can usually be predicted: “follow the money”.

Differences in health system, physician, and payor perspectives. One way to picture a CIN is shown below:

Each of the following represents a key management and leadership issue:

• How do we optimize within the health systems circle? – For example, how do we optimize health system-health system relationships? How do we optimize each health system separately, and as a group?
• How do we optimize payor relationships for the CIN as a whole — For example, do we start with one payor and one payor segment (e.g., Medicare Advantage)? What level of risk do we assume as a CIN? Is there any difference between optimizing the health system – payor relationship and the overall relationship between the CIN (including the physicians) and the payor (i.e., the overlap between all three circles)? How does the CIN shift to deliver optimum service to an employer who wants a wellness emphasis, an employer who wants a “hands off” approach, an individual making his/her own care choice, a managed Medicaid program, and/or a Medicare Advantage program?
• How do we navigate the financial flows within the physician circle? For example, what is the funds flow to primary care and how is it determined? Some CINs have stumbled on this issue right out of the box.
• What roles will physician leaders play in the CIN over time? Some say, “Physicians have to lead the networks.” Others say, “This is a remarkably tough leadership job, only a few can accomplish it, and limiting the role to physicians is short-sighted.”

Many CIN leaders do not view the payor circle – or the overlap between health systems, physicians and payors – as within their purview. However, those that can influence all three circles are achieving more, and faster.

In this picture, the CIN is essentially the overlap between the three circles. All three circles and the overlap move over time in response to market conditions, policies (including regulations and laws), and especially patients (ultimate customers).

Cost reduction. Most recognize that, in order to be successful, the CIN has to reduce costs. Most believe that costs have to be attacked at several points on a parallel basis:
• Care transition points – for example, reducing readmissions but also increasing hand-offs between inpatient and outpatient, primary care and specialty care, surgery and rehabilitation, home care and office care, …
• Staffing and process redesign – for example, primary care process redesign, non-care staffing redesign, virtual office visits, …
• Further scale economies – for example, IT service centers, telemedicine service centers Over time, the CIN has to reduce costs, not just within the circles (i.e., the circle of physicians) but between circles (i.e., more information sharing and less duplication between payors and physicians).

Incentives alignment. As the CIN evolves, do incentives within the CIN adjust? A regional health system CEO and friend once noted, “I have to change my hospital CEOs’ incentive packages every three years. First, I weight overall system performance higher. Then over time, they start to ignore aspects of their own hospital. So I weight that higher. Then, pretty soon, I have to go back to group performance. Over time, I keep the emphasis on both the group and the individual business unit.”

In the CIN, continuing adjustments appear likely – for example, between payor and CIN, between the CIN and its business units, between a physician group and its physicians.

We see signs that CIN leaders recognize the need to make ongoing changes to incentives. As the CIN moves from one emphasis to another – for example, from “the land grab”, to attracting patients, to cost reduction, to fine tuning the delivery system, to next generation process redesign, to fine tuning care for different population segments – one expects to see incentives changes.

Change management. Is it more difficult to manage change in a CIN than in a health system, or a physician group, or a payor? We believe the answer is “yes”.

Will CINs tend to organize more around patient/customer segments rather than around payors? We believe the answer is “yes”. We see early signs in this direction.

Will CINs develop a common culture, common incentives, a common leadership style? The jury is still out. We will have to “check in” later to find out.

About the authorsKeith Moore is CEO and Dean Coddington is a Senior Consultant with McManis Consulting. A version of this article was published in HFM Magazine, February 2016.